Chances are you’ve heard the words cryptocurrency and cannabis next to one another in financial investment circles. That’s because over the past five years these two properties have been the hottest assets within the investment world, producing dramatic ROIs and luring millennials, a generation previously lukewarm about trading stocks, into the trading world.
The success of these two types of assets are from different catalysts, however. Marijuana stocks and their newfound lucrative nature is more easily explained: As more states legalize, more business becomes available, raising more capital, and so forth. At the same time, Americans have never been more in favor of cannabis, especially as a medicine.
Cryptocurrencies have more complex reasons why they have risen so dramatically over the past year. As Business Insider notes, however, much of the success can be tied to the blockchain technology that underpins cryptocurrencies. “Blockchain is the digital, distributed, and decentralized ledger that underlies virtual currencies and is responsible for recording all transactions without the need for a third-party, such as a bank,” writes Business Insider.
While blockchain and cryptocurrencies have long flirted with replacing the problematic all-cash systems the cannabis industry currently uses, it appears one small-cap marijuana stock might have found a solution in Emerald Health Therapeutics, a Canadian cannabis company that’s poised to become one of the biggest marijuana suppliers.
But this February, Emerald Health announced it was in the process of finalizing a joint venture with DMG Blockchain Solutions—named CannaChain Technologies—and will “provide blockchain-based supply chain and e-commerce marketplace for the marijuana industry.”
The new solution will provide extensive plant, growing, third-party testing, and handling data, as well as offer enhanced trust of origin, quality, and safety based on the blockchain’s ability to maintain immutable records as cannabis products flow from seed to sale through the supply chain. Relevant stakeholders for this technology alone include producers, distributors, shippers, government agencies, and consumers.
Blockchain could provide a transparency and authenticity that would legitimize the cannabis industry to the larger business world. However, blockchain technologies are just as unproven as cannabis when it comes to scaling to the large proportions angled by the two companies. Already in Canada, the cannabis industry is struggling in its incipient stages. Because distributors, retailers, and growers aren’t yet in sync, the sale of legal marijuana could experience a three-month delay.
So while we’ll have to wait to realize the efficacy of such a plan, it remains another intriguing development in the relationship between blockchain and cannabis.